News

On June 23, 2016, the Commission approved Decision (D.)16-06-056, the Phase 1 decision in PG&E’s 2015 GT&S Rate Case (Decision). The Commission issued the Decision on July 1, 2016 and it is available in the link below.

Here are some highlights from the Decision:

Revenue Requirement and Term of Case

• Adopts the following GT&S revenue requirements (in millions of dollars), in comparison to PG&E’s requested amounts:

	2015	2016	2017	2018
PG&E Proposed	$1,286.9	$1,347.0	$1,515.0	N/A
CPUC Adopted	$1,045.6	$1,109.7	$1,220.4	$1,324.3
Less Ex Parte Disallowance Placeholder	($137.84)
Net CPUC Adopted	$908.4	$1,109.7	$1,220.4	$1,324.3

• Adds a fourth year -2018- to this rate case period with attrition escalation similar to that for 2017. PG&E will file its next GT&S rate case application in 2017, to be effective January 1, 2019.
• Does not address the $850 million San Bruno penalty. That reduction in revenue requirements and rates will be addressed in Phase 2 of the case.

Revenue Shortfall

• Orders PG&E to amortize its January 1, 2015 through July 31, 2016 revenue shortfall over a 36-month period from mid-2016 through mid-2019. This shortfall will be recovered in end-user rates, not GT&S rates.

Rates

• Adopts interim rates for backbone, storage, and local transmission services consistent with the above revenue requirements, to be effective August 1, 2016. See Advice letter 3727-G filed on July 1, 2016.
• Final rates cannot be adopted until the Commission issues a Phase 2 decision.
• Denies PG&E’s proposal to equalize the backbone rates for the Redwood and Baja paths and instead extends the 2014 Baja-Redwood rate differential into 2015-2018 with the existing differential backbone rate structure of $0.04/Dth.
• Maintains the current end-user rate design for electric generation and other noncore customers, including the current backbone-level service distinctions.
• Maintains the current local transmission rate design methodology.

Core Gas Supply

• Approves PG&E’s proposed changes to core intrastate pipeline capacity holdings. Previous and newly adopted capacity holdings are as follows:

	Prior Capacity (Dth/day)	New Capacity (Dth/day)
Redwood (Annual)	608,766	605,088
Baja (Annual)	348,000	182,000
Baja (Seasonal)	321,000 (Dec-Feb)	157,000 (Nov-Mar)

• Authorizes PG&E to file a Tier 1 Advice Letter if the need arises for it to increase intrastate pipeline capacity corresponding to interstate pipeline approval requests.
• Adopts PG&E’s proposed storage inventory for Core Storage Contract and its proposal to adjust the November to March withdrawal rights to fully incorporate existing assets that are available to meet peak load conditions.
• Grants PG&E’s proposal to file a Tier 3 Advice Letter to implement the assignment (and the corresponding assumption of cost responsibility) of incremental storage capacity to Core Transport Agents (CTAs) once the following two conditions are met: (a) the date occurs on April 1, 2016 or later; and (b) the total incremental core storage withdrawal requirement exceeds 100 MDth/d.
• Adopts PG&E’s proposal to change the winter withdrawal profile for the G-CFS service by an increase in the withdrawal rights in December and January, and a decrease in withdrawal rights in February and March. PG&E maintains that this proposal will reshape the core Winter Firm Withdrawal Rights Curve to better fit Core winter supply requirements and improve winter reliability.

Core Transport Agents

• Grants PG&E’s proposal to change the pipeline capacity allocation methodology from a January Capacity Factor to a Seasonal Capacity Factor, effective on August 1, 2016, for capacity allocations covering November 1, 2016 forward. See Advice letter 3725-G filed on June 30, 2016.
• Adopts PG&E’s proposal to eliminate the annual inventory threshold that determines the method by which injection and withdrawal rights for Core Procurement Groups (Core Gas Supply and CTAs). This will eliminate the fixed-rights method and use the variable method exclusively.
• Adopts PG&E’s proposed modifications to the Core Load Forecasting Model.
• Directs PG&E to provide the CTAs detailed gas SmartMeter usage data for their customers to the extent this data can be provided without imposing undue operational burden on PG&E.
• Orders the Energy Division to host a workshop within 90 days after the effective date of this Decision to address implementation of the various changes to the CTA program adopted in this Decision. The workshop will be to implement the following changes to the Core Transport Agent (CTA) program: a. Future changes to the Core Load Forecast Model and how to incorporate gas SmartMeter data into the Core Load Forecast model to improve the accuracy of Determined Usage; b. How CTA customer usage data generated by gas SmartMeters may be provided to CTAs, including the format for the data, and the timing for when PG&E shall begin providing the data; c. Changes to Gas Schedule G-CT to implement the transition to CTA self-management of gas storage services and to incorporate the changes to the Firm Winter Capacity Requirement… Requires PG&E and the CTAs to submit a joint workshop report describing the resolution and/or status of each of the issues within 60 days after the workshop.

Resolves various additional issues raised by CTAs:

• The Core Transport Agent Consortium (CTAC) and Commercial Energy’s proposals that PG&E no longer procure storage services on behalf of the CTAs are granted. The Decision adopts a seven-year transition period starting on April 1, 2018.
• CTAC and Commercial Energy’s proposals that PG&E no longer procure intrastate capacity on behalf of the CTAs are denied.
• CTAC’s proposal to modify the second and third options for complying with the Firm Winter Capacity and to add a fourth option for complying with the Firm Winter Capacity are granted. Gas Schedule G-CT will be modified to adopt these modifications. See Advice letter 3731-G filed on July 8, 2016

Other

• Orders PG&E to provide a report on its gas storage risk management and safety initiatives within 60 days of the effective date of this Decision.

More Information Available

Complete details are available in the link to Final Decision D.16-06-056 authorizing PG&E’s 2015-2018 Revenue Requirements for GT&S services and adopting Interim Rates.

If you have any questions, please don't hesitate to reach out to your CGT Representative.